CHAPTER 4 PAGE. 130 REVIEW QUESTIONS 1. What is a sole proprietorship?

What are the major advantages and disadvantages of this form of business ownership? A sole proprietorship is a business that is owned (and usually operated) by one person. Although a few sole proprietorships are large and have many employees, most are small. Sole proprietorship is the simplest form of business ownership and the easiest to start. Advantages: a. Ease of Start-Up and Closure b. Pride of ownership c. Retention of all profits d. No special taxes e. Flexibility of being your own boss Disadvantages: a. Unlimited liability b. Lack of continuity c. Lack of money d. Limited management skill e. Difficulty in hiring employees 2. How does a partnership differ from a sole proprietorship? Which disadvantages of sole proprietorship does the partnership tend to eliminate or reduce? In a sole proprietorship, all business profits become the property of the owner, but the owner is also personally responsible for all business debts. A successful sole proprietorship can be a great source of pride for the owner. When comparing different types of business ownership, the sole proprietorship is the simplest form of business to enter, control, and leave. It also pays no special taxes. Sole proprietorships nevertheless have disadvantages, such as unlimited liability and limits on one persons ability to borrow or to be an expert in all fields. As a result, this form of ownership accounts for only 4 percent of total revenues when compared with partnerships and corporations. Whereas, like sole proprietors, general partners are responsible for running the business and for all business debts. Limited partners receive a share of the profit in return for investing in the business. However, they are not responsible for business debts beyond the amount they have invested. It is also possible to form a master limited partnership (MLP) and sell units of ownership to raise capital. Regardless of the type of partnership, it is always a good idea to have a written agreement (or articles of partnership) setting forth the terms of a partnership. The disadvantages of sole proprietorship does the partnership tend to eliminated are Ease of Start-Up Partnerships are relatively easy to form. As with a sole proprietorship, the legal requirements often are limited to registering the name

of the business and obtaining any necessary licenses or permits. Availability of Capital and Credit Because partners can pool their funds, a partnership usually has more capital available than a sole proprietorship does. Personal Interest General partners are very concerned with the operation of the firmperhaps even more so than sole proprietors. Retention of Profits As in a sole proprietorship, all profits belong to the owners of the partnership. The partners share directly in the financial rewards and therefore are highly motivated to do their best to make the firm succeed. As noted, the partnership agreement should state how much profit or loss each partner receives or is responsible for.

3. What is the difference between a general partner and a limited partner? y A general partner is a person who assumes full or shared responsibility for operating a business y A limited partner is a person who invests money in a business but who has no management responsibility or liability for losses beyond his or her investment in the partnership

4. What issues should be included in a partnership agreement? Why? The partnership agreement should state who will make the final decisions, what each partners duties will be, and the investment each partner will make. The partnership agreement also should state how much profit or loss each partner receives or is responsible for. Finally, the partnership agreement should state what happens if a partner wants to dissolve the partnership or dies. 5. Explain the difference between a. an open corporation and a closed corporation. b. a domestic corporation, a foreign corporation, and an alien corporation. y y y y y A closed corporation is a corporation whose stock is owned by relatively few people and is not sold to the general public. An open corporation is one whose stock can be bought and sold by any individual An domestic corporation incorporated business, a in the state in which it is incorporated. A foreign corporation is a domestic corporation An alien corporation A corporation chartered by a foreign government and conducting business in the United States.

6. Outline the incorporation process, and describe the basic corporate structure. If you decide that the corporate form is the best form of organization for you, most experts recommend that you begin the incorporation process by consulting a lawyer to be sure that all legal requirements are met.

The basic structure of corporate structure is a stockholders (owners) elect a board of director to set company goals and develop general plans (or strategies) for meeting those goals. Then, board of directors appoints an officers and hire the employees.

7. What rights do stockholders have? Common stock, preferred stock, a dividend, a proxy Perhaps the most important right of stockholder is to share in the profit earned by the corporation through the payment of dividends. And receiving information about the corporation, voting on changes to the corporate charter, and attending the corporations annual stockholders meeting, where they may exercise their right to vote.

8. What are the primary duties of a corporations board of directors? How are directors selected? The board of directors is the top governing body of a corporation and is elected by the stockholders. Board members can be chosen from within the corporation or from outside it.The major responsibilities of the board of directors are to set company goals and develop general plans (or strategies) for meeting those goals. The board also is responsible for the firms overall operation.

9. What are the major advantages and disadvantages associated with the corporate form of business ownership? Advantages : y Limited Liability y Ease of Raising Capital y Ease of Transfer of Ownership y Perpetual Life y Specialized Management

Disadvantages : y Difficulty and Expense of Formation y Government Regulation and Increased Paperwork y Conflict Within the Corporation y Double Taxation y Lack of Secrecy 10. How do an S-corporation and a limited-liability company differ? An S-corporation is a corporation that is taxed as though it were a partnership. A limited-liability company (LLC) is a form of business ownership that combines the benefits of a corporation and a partnership while avoiding some of the restrictions and disadvantages of those forms of ownership. The difference between S-corporation and limited-liability company are An LLC is not restricted to 100 stockholdersa common drawback of the S-corporation. LLCs are also less restricted and have more flexibility than S-corporations in terms of who can become an owner. 11. Explain the difference between a regular corporation and a not-for-profit corporation. A not-for-profit corporation is a coperation organized to provide social, educational, religous, or other service rather than earn a profit. Regular corporation is corporation with gain profit. 12. Why are cooperatives formed? Explain how they operate. Because a corporation is an artificial person created by law, with most of the legal person, including the right to start and operate a business, to own property, to borrow money, to be sued or sue, and to enter into contracts. They operate with the corporate form of ownership, stock can be sold to individuals to raise capital. The people who own a corporations stockand thus own part of the corporationare called stockholders. Generally, corporations are classified as closed corporations (few stockholders) or open corporations (many stockholders).

13. In what ways are joint ventures and syndicates alike? In what ways do they differ Like joint venture, a syndicate is dissolved as soon as its purpose has been accomplished. the difference is, joint venture is an association of two or more individuals or companies engaged in a solitary business enterprise for profit without actual partnership or incorporation, differ to a syndicate is an association of individuals formed for the purpose of conducting a particular business. 14. What is a hostile takeover? How is it related to a tender offer and a proxy fight?

Hostile takeover is a situation in which the management and board of directors of a firm targeted for acquisition disapprove of the merger. When a merger or acquisition becomes hostile, a corporate raideranother company or a wealthy investormay make a tender offer or start a proxy fight to gain control of the target company. 15. a. b. c. Describe the three types of mergers. A horizontal merger is a merger between firms that make and sell similar products or services in similar markets A vertical merger is a merger between firms that operate at different but related levels in the marketing of a product A conglomerate merger takes place between firms in completely different industries

VIDEO CASE 4.1

Annies Homegrown: A Corporation with Entrepreneurial Spirit When Annie Witheys first husband suggested she create a snack food to go into the resalable bag hed invented, the 21-year-old newlywed developed an all-natural, cheddar cheeseflavored popcorn. The bag never made it to market, but Annies popcorn, called Smartfood, became one of the fastest-selling snack foods in U.S. history. In fact, in 1989 PepsiCo Incs Frito-Lay division bought the brand for about $15 million. Annie, an organic farmer and mother of two children, cashed out stock worth $1 million and created the all-natural white-cheddar macaroni and cheese product she had been thinking about for some time. She and her husband initially marketed it by knocking on supermarket doors and canvassing ski lodges, outdoor folk concerts, store parking lots, and wherever people gathered. Thus Annies Homegrown, a pioneering entrepreneurial company in the natural and organic food industry, was born.

This venture was also a success for Annie, and even though her firm has gone on to become part of a larger conglomerate, Annie remains the entrepreneurial heart of the brand. I learned a lot and took a lot with me, says Annie of her early experience running the operation. Now she delegates day-to-day management, as well as public appearances, to others, and concentrates on what she does bestcreating new recipes and providing inspiration to her coworkers. Being a public figure? Thats just not me, she says. Im not very good at making presentations and selling, she feels. Annies Homegrown offers 80 natural and organic pasta and canned products, as well as snack crackers and a microwaveable version of its now-famous macaroni and cheese, designed for college dorm room convenience. Its products are found in Costco and Target, as well as in 18,000 grocery and 6,000 natural food stores nationwide. Yet Annies still has only about 3 percent of the macaroni and cheese market compared with the leader, Kraft, which has 80 percent. We could never compete directly, says CEO John Foraker. We appeal to a consumer who is less price conscious and willing to pay more to feel good about what they eat. Because Annies mac and cheese also costs 30 percent more than Krafts, the companys marketing focuses on product attributes. The nations leading brand of organic and natural pasta meals and snacks, Annies Homegrown represents what Customer Relationship Magazine calls an unmistakable shift toward organic products, green marketing, and sustainability efforts. Annies story, well known to many of the companys customers, also helps build loyalty to the companys brands. But for Annie Withey, becoming successful meant taking some risks. Annie had to personally guarantee all loans to her company early on. Your entire career and reputation are on the line, says company president Paul Nardone. But Annie has always trusted her instincts, and events have usually proven her right. She is our moral compass, says Nardone, and a continuing inspiration. By 1998 a capital infusion from two small food companies, Consorzio and Fantastic Foods, was helping fuel growth, but choosing the right investment company would become critical to the companys long-term expansion goals. CEO Foraker says Solera Capital LLC, a $250 million private-equity firm run by women, was looking to enter the fast-growing organic food market and took a majority stake in the company with an initial $20 million investment in 2002. Its a perfect fit, says Molly Ashby, Soleras chief executive officer. Its a great brand, very authentic, with tremendous crossover into both mainstream and natural markets. The remaining interest in the company is held by Withey, current management, and a small group of founding investors. Solera recently bought Consorzio and Fantastic Foods and combined them with Annies Homegrown to form Homegrown Naturals Inc., based in Napa, California. As founder, Annie Withey has assumed the role of inspirational president. She still writes the text on every product box, and Bernie the Bunny, inspired by her brothers illustration, still appears on every package. As she continues to fill the role of creative leader of the company she started, Annie has been described as its quality gatekeeper and a humble person whose

creative instincts are right on. When customers write or e-mail to suggest new products, each idea is still considered, and the real Annie never gets tired of hearing how much people enjoy her products. Vide\ Case 4.1 Annies Homegrown: A Corporation Questions 1. What personal traits does Annie Withey exhibit that entrepreneurs need to succeed? How have her personal characteristics helped shape the success of her business? 2. How did the company evolve from a small business into a multimillion dollar leader in the natural organic food industry? What long-term growth strategies is the company pursuing as it moves into the future? 3. Explore Annies Web site at http://www.annies.com. What unique features did you find? How does this Website support Annies mission?

Answers 1. Withey has a responsibility to her customer and social life. She does not just thinking about the quantity and profit, but also she thinks about the social life. She cares about the environment and quality. She also thinks and cares about an unmistakable shift toward organic products, green marketing, and sustainability efforts. Thats why she can be succeed because she keeps her quality products and keeps the truthfulness and be creative entrepreneur by considering the customers ideas. She is brave enough to take some risks, because to her, success meant to take some risk. She thinks that to be success we have to fight even though there is so many risks. 2. The company can be raised as the big company because they run this business wellprepared and well-planned. Besides, they keep the truthfulness, humble, and keep improving the quality of product, and considering the view from the customers. As the growing companies, they started from the small business, but then they arrange the longterm strategic such as an unmistakable shift toward organic products, green marketing, and sustainability efforts to keep their quality products and satisfy the customers by being responsible to the social life. 3. In Annies website there is doing good feature. In that feature, Annie Withey give donations to community gardens, school gardens and other educational programs that connect children directly to gardening. These funds can be used to buy gardening tools, seeds or other needed supplies. With this website, Annie can promote their product easily. So, people will know about the healthy food. Promoting sustainability and supporting organizations which share their vision. We value all beings and are serious global stewards.

CHAPTER 5 PAGE 160 REVIEW QUESTION 1. What information would you need to determine wheter a particular business is small according to SBA guidelines? The information is depently own and operated for profit and its not dominant in its field and most small firms have annual sales well below the maximum limits in the SBA guidelines 2. Which two areas of business generally attract the most small businesses? Why are these areas attractive to small business? Growing industries, such as outpatient care facilities, are attractive because of their profit potential. However entrepreneurs choose areas with which they are familiar, and these are most often established industries. 3. Distinguish among service industries, distribution industries, and production industries. a. Distribution industries y Includes retailing, wholesaling, transportation, and communications. y Account for approximately 33 percent of all small businesses y Almost three quarters are involved in retailing, that is, the sale of goods directly to consumer y Clothing and jewelry stores, pet shops, bookstores, and grocery stores, for example are all retailing firms. b. Services Industries y Accounts for more than 48 percent of all small businesses. y About three quarters provide such nonfinancial sevices as medical and dental care, watch shoe, and TV repairs; haircutting and styling; restaurant meals; such as accounting, insurance, real estate and investment counseling. y An increasing number of self employed Americans are running service businesses from home. c. Production industries y Includes the construction, mining, and manufacturing industries. y Only about 19 percent of small businesses are in this group, mainly beause this industries require relatively large initial invetments. y Small firms that do venture into production generally make parts and subassemblies for larger manufacturing firms or suply special skills to larger construction firms.

4. What kinds of factors encourage certain people to start new businesses? a Characteristics of Entrepreneurs y Entrepreurial spirit b. Other personal Factors y Independence y A desire to determine ones own destiny y A wilingness to find and accept a challenge y Family background y Age c. Motivation d. women as Small business owners e. Teenagers as Small Business owners 5. What are the major cause of small business failure ? do these causes also apply to larger businesses? capital, management, and planning are the key ingredients in the survival of a small business, as well as the most common reasons for failure. Entrepreneurs need to have not only the capital to open a business but also the money to operate it in its possibly lenghty start up phase. On cash flow obtacles often leads to others. 6. Briefly describe four contributions of small business to the american economy? y Providing technical innovation Invention and innovation are part of the foundations of our economy. Small firms produce two and a half times as many innovations as large firms relative to the number of persons employed. y Providing Emploment Small firms traditionally have added more that their proportional share of new jobs to the economy. Small business provide 67 percent of workers with their first jobs and initial on the job training in basic skill. Small businesses contribute significantly to solving unmeployment problems. y Providing Competition Small business challenge larger, established firms in many ways, causing them to become more efficient and more responsive to consumer needs. A small busines cannot competence with a large firm in all respects. A number of small firms, each competing in its own particular area and its own particular way, together have desired competitive effect y Filling needs of Society an other businesses Small firms also provide a variety of goods and services to each other and to much larger firms. Large firms generally buy parts and assemblies from smaller firms for one very

good reason. It is less expensive than manufacturing the parts in their own factories. This lowerr cost eventualy is reflected in the price that consumers pay for their products. 7. What are the major advantages and disadvantages of smallness in business? - Advantages y Personal relationships with customers and employees The owners of retail shops get to know many of their customers by name and deal with them on a personal basis. Through such relationships, smallbusiness owners often become involved in the social, cultural, and political life of the community. y Ability to adapt to change Through personal relationships with customers, the owners of small businesses quickly become aware of changes in peoples needs and interests, as well as in the activities of competing firms. y Simplified record keeping Obviously, enough records must be kept to allow for producing and filing accurate tax returns. y Independence Small business owners are the masters of their own destinies at least with regard to employment. y Other advantages Include being able to keep all profits, the ease and low cost of going into business and (if necessary) going out of business, and being able to keep business information secret. y Disadvantages Risk of failure Well-established small firms can be hit hard by a business recession mainly because they do not have the financial resources to weather an extended difficult period. Limited potential The owner may havesome technical skill and may have started a business to put this skill to work. Such a business is unlikely to grow into big business. In addition, employees potential for advancement is limited. Limited ability to raise capital Small businesses typically have a limited ability to obtain capital. Most smallbusiness financing comes out of the owners pocket. Personal loans from lending institutions provide only about one-fourth of the capital required by small businesses.

8. What are the major components of a business plan? Why should an individual develop a

business plan? Components of a business plan: - Introduction Basic information such as the name, address, and phone number of the business; the date the plan was issued; and a statement of confidentiality to keep important information away from potential competitors. - Executive summary A one-to-two page overview of the entire business plan, including a justification why the business will succeed. - Benefits to the community Information on how the business will have an impact on economic development, community development, and human development. - Company and industry The background of the company, choice of the legal business form, information on the products or services to be offered, and examination of the potential customers, current competitors, and the businesss future. - Management team Discussion of skills, talents, and job descriptions of management team, managerial compensation, management training needs, and professional assistance requirements. - Manufacturing and operations plan Discussion of facilities needed, space requirements, capital equipment, labor force, inventory control, and purchasing requirement. - Labor force Discussion of the quality of skilled workers available and the training, compensation, and motivation of workers. - Marketing plan Discussion of markets, market trends, competition, market share, pricing, distribution, promotion, and service policy. - Financial plan Summary of the investment needed, sales and cash flow forecasts, breakeven analysis, and sources of funding. - Exit strategy Discussion of succession plan or going public. Who will take over the business? - Critical risks and assumptions Evaluation of the weaknesses of the business and how the company plans to deal with these and other business problems.

Appendix Supplementary information crucial to the plan, such as resume of owners and principal managers, advertising samples, organization chart, and any related information. An individual should develop a business plan because : Business plan serves as a concise document that the potential investors can examine to see if they would like to invest or assist in financing a new venture (business plan as a communication tool). It shows whether a business has the potential to make a profit. The business plan helps to track, monitor, and evaluate the progress (business plan as a management tool). The business plan is a living document ; it is modified as the entrepreneur gains knowledge and experience. It also serves to establish timelines and milestones and allows comparison of growth projections against actual accomplishments. The business plan guides a businessperson through the various phases of business (business plan as a planning tool).

9. Identify five ways in which the SBA provides management assistance to small

businesses. - Management courses and workshops The management courses offered by the SBA cover all the functions, duties, and roles of managers. The most popular such course is a general survey of eight to ten different areas of business management. In follow-up studies, business people may concentrate in-depth on one or more of these areas depending on their partucular strengths and weaknesses. The SBA occasionally offers one-day conferences. These conferences are aimed at keeping owner-managers up-to-date on new management developments, tax laws, and the like. - SCORE (Service Corps of Retired Executives) Is a group of more than 12.400 business people including more than 2.000 women who volunteer their services to small businesses through the SBA. The collective experience of SCORE volunteers spans the full range of American enterprise. A small-business owner who has a particular problem can request free counseling from SCORE. An assigned counselor visits the owner in his or her establishment and, through careful observations, analyzes the business situation and the problem. Finally, the counselor offers a plan for solving the problem and helping the owner through the critical period.

Small-business Institutes (SBIs) Are groups of senior and graduate students in business administration who provide management counseling to small businesses. Like SCORE volunteers, they analyze and help solve the problems of small-business owners at their business establishments. Small-business Development Centers (SBDCs) Are university-based groups that provide individual counseling and practical training to owners of small businesses. SBDCs draw from the resources of local, state, and federal governments, private businesses, and universities. These groups can provide managerial and technical help, data from research studies, and other types of specialized assistance of value to small businesses. SBA pubications The SBA issues management, marketing, and technical publications dealing with hundreds of topics of interest to present and prospective managers of small firms.

10. Identify two ways in which the SBA provides financial assistance to small businesses.

Regular business loans Most of the SBAs business loans are actually made by private lenders such as banks, but repayment is partially guaranteed by the agency. That is, the SBA may guarantee that it will repay the lender up to 90% of the loan if the borrowing firm cannot repay it. Small-business investment companies (SBICs) AN SBIC is a privately owned firm that provides venture capital to small enterprises that meet its investment standards. SBICs are intended to be profit-making organizations. The aid that SBA offers allows them to invest in small businesses that otherwise would not attract venture capital.

11. Why does the SBA concentrate on providing management and financial assistance to

small businesses? - Statistics show that most failures in small business are related to poor management. - Small businesses seem to be constantly in need of money. An owner may have enough capital to start and poerate the business. But then he or she may require more money to finance increased operations during peak selling seasons, to pay for required pollution control equipment, to finance an expansion, or to mop up after a natural disaster. - 12. Venture Capital - is money that is invested in small (and sometimes struggling) firms that have the potential to become very successful. In many cases, only a lack of capital keeps these firms from rapid and solid growth. The people who invest in such firms expect that their investments will grow with the firms and become quite profit table. The

popularity of these investments has increased over the past 30 years, but most small firms still have difficulty obtaining venture capital. To help such businesses, the SBA licenses, regulates, and provides financial assistance to small-business investment companies (SBICs). An SBIC is a privately owned firm that provides venture capital to small enterprises that meet its investment standards. Such firms as America Online, Apple Computer, Federal Express, Compaq Computer, Intel Corporation, Outback Steakhouse, and Staples, Inc., all were financed through SBICs during their initial growth period. SBICs are intended to be profit-making organizations. The aid that SBA offers allows them to invest in small businesses that otherwise would not attract venture capital. Since Congress created the program in 1958, SBICs have financed more than 102,000 small businesses for a total of about $50.6 billion. In 2009, SBIC benefited 1,477 businesses, and 24 percent of these firms were less than two years old. 13. A franchise is a license to operate an individually owned business as if it were part of a chain of outlets or stores. It is an attractive means of starting and operating a small business. A franchisor is an individual or organization granting a franchise. A franchisee is a person or organization purchasing a franchise. The franchisor supplies a known and advertised business name, management skills, the required training and materials, and a method of doing business. The franchisee supplies labor and capital, operates the franchised business, and agrees to abide by the provisions of the franchise agreement. Both the franchisor and franchisee must fulfill their obligations under the contract. While the parent-child analogy is used on occasions to describe the relationship between a franchisor and franchisee, it is neither the legal relationship nor even the practical business relationship. The franchisor teaches the franchisee how to operate according to the system and , the franchisor assists the franchisee in growing their business. The franchisor establishes many of the rules and boundaries for operating the business. But, franchisees are not children. They have made a business decision to purchase the franchise and have voluntarily agreed to operate the business according to the rules and boundaries set forth by the franchisor. They are responsible for the activities of the business, and its failure and success are typically their responsibility. Potential franchisees are provided information about the franchise and the contract in the Uniform Franchise Offering Circular (UFOC) prior to their making the decision to become a franchisee. They have ample opportunity to review the documents and to seek professional (legal, accounting, etc.) opinions regarding both the viability of the business concept and the terms of the contract. If their investigation of the opportunity leads them to believe that it is not right for them, they are free to look at other franchises or to start their own business. If they choose to become a franchisee and later decide that it was the wrong decision, most franchise agreements allow them to sell their business.

By and large franchisors want their franchisees to succeed, and most work hard to provide their franchisees with the tools and coaching they need to be successful. However, franchisees are independent businesspeople and they make many business decisions that ultimately can determine the success or failure of their business. How well they execute the franchisors operating system, whom they hire, how much they pay their employees, how they schedule their employees, and what prices they charge for their product or service can impact their bottom line. While the franchisor can offer advice in these areas, these crucial decisions are the prerogative of the franchisee. The franchisor gets outlets are maintained and operated according to its own standards by the franchise agreement. The franchisee gets the opportunity to start a business with limited capital and to make use of the business experience of others, The franchisee also receives materials to use in local advertising and can take part in national promotional campaigns sponsored by the franchisor. The franchisor provides the material of advertising and guidance and help to the franchisee. And the franchisee provides the payment and fulfill the requirements.

15. Benefit of franchising for the franchisor. The franchisor gains fast and well-controlled distribution of its products without incurring the high cost of constructing and operating its own outlets. The franchisor thus has more capital available to expand production and to use for advertising. At the same time, it can ensure, through the franchise agreement, that outlets are maintained and operated according to its own standards. The franchisor also benefits from the fact that the franchiseea sole proprietor in most casesis likely to be very highly motivated to succeed. The success of the franchise means more sales, which translate into higher royalties for the franchisor. Benefit of franchising for the Franchisee: - The franchisee gets the opportunity to start a business with limited capital and to make use of the business experience of others. Moreover, an outlet with a nationally advertised name, such as Radio Shack, McDonalds, or Century 21 Real Estate, has guaranteed customers as soon as it opens. - If business problems arise, the franchisor gives the franchisee guidance and advice. This counseling is primarily responsible for the very high degree of success enjoyed by franchises. In most cases, the franchisee does not pay for such help. The franchisee also receives materials to use in local advertising and can take part in national promotional campaigns sponsored by the franchisor.

Chapter 5 EXPLORING THE INTERNET Perhaps the most challenging difficulty for small businesses is operating with scarce resources, especially people and money. To provide information and point small-business operators in the right direction, many Internet sites offer helpful products and services. Although most are sponsored by advertising and may be free of charge, some charge a fee, and others are a combination of both. The SBA within the U.S. Department of Commerce provides a wide array of free information and resources. You can find your way to the SBA through http://www.sbaonline.sba.gov or http://www.sba.gov. Visit the text Web site for updates to this exercise. Assignment 1. Describe the various services provided by the SBA site. y Financial Assistance All businesses require money to get off the ground and to continue to grow. SBA's resources help you research loan programs, explore options around export financing, learn more about Small Business Investment Companies (SBICs), and determine if surety bonds are ideal for your situation. Loan Programs Financing your business requires research to find the most appropriate funding model. SBA offers a variety of loan programs for very specific purposes. Venture Capital If youre interested in obtaining financing for your company, the U.S. Small Business Administration and Investment Division (SBIC) may be able to help. Surety Bonds A surety bond is an instrument that is signed by the Principal (or Contractor) and the Surety Company in order to protect the interests of the Obligee (the buyer, or party issuing the contract) in the event the Principal defaults on the contract. A surety bond is acquired by the Principal from the Surety Company for a fee, as a sort of insurance policy to protect the Obligee. If the Principal defaults, the Surety Company steps in to ensure the contract is completed. Export Financing In today's global economy, selling your goods around the world can bring large rewards. With three specialized loan guaranty programs, the SBA can help provide export financing, credit to close a sale, and funds for working capital.

SBA Disaster Assistance SBA provides low interest disaster loans to homeowners, renters, businesses of all sizes and private, non-profit organizations to repair or replace real estate, personal property, machinery & equipment, inventory and business assets that have been damaged or destroyed in a declared disaster.

Online Small Business Training SBA is dedicated to helping you and your small business succeed. There are a variety of online trainings which cover many business topics for you to learn. For example like Starting a Business, Managing a Business, Financing a Business, Contracting, and Other Featured Training.

Counseling & Assistance The SBA provides small business counseling and training through a variety of programs and resource partners, located strategically around the country Special Audiences The SBA is a strong advocate of minority and special audiences. Whether you're looking for information on programs and services in support of women entrepreneurs, veteran's business development, Native Americans, special minority programs including HUBZone, Small Disadvantaged Business Certification and 8(a) business development, you'll find it here. Laws/Regulations Through the SBA, the Offices of Advocacy, National Ombudsman and Hearings and Appeals represent small businesses concerns. Learn what is being done to assist small business on issues concerning legislation, regulation and disputes. In addition, within our law library, youll find SBA reports, statistics, records, studies, and information on the latest laws and regulations affecting small businesses. Topics include:
y y y y

Small Business Advocacy National Ombudsman Law Library Hearings & Appeals

Compliance Business.gov, the official business link to the U.S. government, allows users to easily find compliance information from all major U.S. federal agencies regulating or serving small businesses. Business.gov is managed by the U.S. Small Business Administration

in a partnership with 21 federal agencies and is part of the Presidents Management Agenda. 2. What sources of funding are there? Provided 23 million small business owners with tax relief averaging more than $2,853 through 2003, by quadrupling the expensing provision to $100,000, raising the expensing phase-out threshold to $400,000, and raising the first year bonus depreciation deduction from 30 to 50 percent under the Jobs and Growth Tax Relief Reconciliation Act of 2003; Current Agency Financial Report (AFR) - FY 2010, Strategic Plan, FY2011-2016, President's Proposed FY2011 Budget for SBA, 2009 Summary of Performance and Financial Information, Annual Performance Plans (CBJ), Annual Performance Reports (PARs and PAR Pilots), Citizens Report (Performance and Financial Highlights) - FY 2008, Annual Performance Report (APR) - FY 2008, Status of Program Performance and Improvement Efforts (PART), Status of SBA President's Management Agenda Initiatives (PMA) , GAO High-Risk Improvement Plans with Status of Implementation (SBA has not had a GAO-identified high-risk issue since 2003), Inspector General Audits and Investigative Reports , Report Evidences of Waste, Fraud, or Abuse to the Inspector General, Annual Financial Reports, Budget Requests and Performance Plans, Loss Reports, SBA Loan Program Performance Tables, Performance Data Validation & Certification, and Additional Reports & Plans. 3. What service would you like to see improved? How? The service that need to be improved is Disaster Loan Program, because it is very important for human being and the citizen. SBA needs to strengthen administrative procedures relating to program eligibility and continue to implement technology and processes to reduce administrative costs.